US worth studying over global milk competition

he audience at a Hinds workshop on investing in facilities such as cow barns and covered feed...
he audience at a Hinds workshop on investing in facilities such as cow barns and covered feed pads. Photo by Maureen Bishop

The ability of large dairy farms in the United States to increase their scale quickly could have an effect on the international dairy market.

It did not take a big shift in production on the ''mega'' dairy farms to influence the international market, farmers at a DairyNZ workshop at Hinds were told.

Kim Mashlan, from DairyNZ's research and development section, said it was important for New Zealand dairy farmers to understand the global competitiveness of the industry.

Milk produced at 540 American mega dairy farms was equivalent to the entire milk production of New Zealand, Mrs Mashlan said.

The mega dairy farms were milking between 12,000 and 30,000 cows and 40% of the American milk production came from 800 of these large farms.

''In the 2000s, it was just 10%,'' Mrs Mashlan said.

Domestic fresh milk sales in the US were declining but farms were beginning to invest in manufacturing more aligned with international requirements.

Production costs for top producers were comparable with some farms in New Zealand and when operating expenses and capital costs were combined, US farms were not far off New Zealand, she said.

''The cost of production is coming down in the US and rising in New Zealand,'' Mrs Mashlan said.

America would compete in the export market in the next three to five years.

Other competitive advantages of the mega dairy farms included cheap labour, precision management, state of the art technology and the scale to take advantage of it, cheap land, highly capable management, and infrastructure costs about half what they were in New Zealand.

New Zealand's export history gave it a competitive advantage, Mrs Mashlan said.

New Zealand was producing what the customer wanted, was responsive to supply chains, was a reliable supplier of safe food and had a free trade agreement with China. On-farm, the New Zealand industry had a sharing culture and was co-operative.

Grazed pasture was still the cheapest feed source internationally, she said.

''We need to consider how we can use technology to make use of our cheapest feed - pasture.''

New Zealand must farm to its competitive advantage and use an increasingly precise approach to farming, make appropriate infrastructure responses to environmental challenges, avoid over-reliance on imported feed and avoid paying too much for land.

- By Maureen Bishop 

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